Tesla Inc. is expected to report first-quarter results on Wednesday, with Wall Street bracing for a loss following two quarters of profits and hoping for better news on production and demand.
Tesla TSLA, +0.75% reports after the bell and has scheduled a conference call with analysts for 5:30 p.m. Eastern.
The timing of the report is on the early side for Tesla, which typically reports its first-quarter numbers in early May, and it comes as the stock has been under pressure following a first-quarter delivery miss earlier this month.
It’s also scheduled to take place two days before an event aimed at showcasing Tesla’s autonomous driving capabilities.
Chief Executive Elon Musk already warned investors that Tesla is unlikely to report a profit this quarter, saying it could return to profitability in the second quarter.
“Our suspicion is that Q1 EPS could be an outright disaster, given that Tesla guided for a loss with an entire month left in the quarter, and its inherently high degree of operating leverage,” said Garrett Nelson, an analyst with CFRA.
In order to drive down unit costs, Tesla really needs to be operating at high-capacity utilization rates due to the high fixed costs of auto manufacturing, Nelson said. “So we could see a jump in its per vehicle costs,” he said.
Wall Street will likely be “very focused” on quarterly margins, Tesla’s quarter-on-quarter cash burn, and the company’s ability to reach its 2019 shipment guidance, Nelson said.
“We know what Q1 deliveries were, but how did average price realizations and unit costs hold up amid its announced price cuts and a reduced mix of higher-priced Model S and X vehicles?”
The quarterly report is also the first chance for the market to look at Tesla’s cash reserves and liquidity situation after it had to shell out $920 million on convertible senior notes that came due during the quarter.
Here’s what else to expect:
Earnings: Analysts at FactSet expect Tesla to report an adjusted loss of 94 cents a share. That would compare with an adjusted loss of $3.35 a share in the first quarter of 2018 and a GAAP and an adjusted per-share profit in the two previous quarters.
Estimize, a crowdsourcing platform that gathers estimates from Wall Street analysts as well as buy-side analysts, fund managers, company executives, academics and others, seems to believe in a small profit for the company, expecting a loss of 8 cents a share.
Revenue: The analysts surveyed by FactSet are expecting quarterly revenue of $5.5 billion, up from $3.4 billion in the year-ago quarter. The Estimize forecast is for $6.2 billion.
Stock: Tesla shares have lost more than 5% in the past 12 months, and more than 18% so far this year. That contrasts with gains of around 7% and 16% for the S&P 500 index. SPX, +0.16% Tesla stock has underperformed General Motors Co. GM, +0.78% and Ford Motor Co. F, +0.53% shares.
What else to expect: A perennial worry with Tesla is that competition for its luxury cars and even for the cheaper Model 3 could be heating up. The electric-vehicle segment is growing in volume as well as variety, said Karl Brauer, an analyst with Kelley Blue Book.
“That’s good news for the consumer, but not so good for Tesla. The increased competition will make it difficult for Tesla to assume they can build as many cars as possible and there will always be a customer waiting to buy them,” as the market saw with the first-quarter delivery miss, he said.
Investors also will want more clarity about Tesla’s plans to close several, if not most of its stores.
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“Tesla’s armor showed signs of cracking in the first quarter,” said Jessica Caldwell, an analyst with Edmunds. About half of the vehicles Tesla produced in the first quarter were shipped overseas, according to Edmunds estimates, “which signals weakening domestic demand,” Caldwell said.
“Tesla’s big challenge now is to attract new buyers to the brand, which could prove an uphill battle for a company that historically has never had to advertise or offer incentives,” she said.
Besides the flip-flopping regarding the store closures, Tesla has also tweaked its car prices and shifted sales-strategy gears several times in recent months, including earlier in April, when it said it would not sell the cheaper Model 3 online anymore but instead do so only through phone and store orders.
Tesla is unlikely to make mention of the ongoing rift between Musk and the U.S. Securities and Exchange Commission, but Musk could let slip a comment or two. Musk and SEC officials were ordered to resolve among themselves a dispute about Musk’s tweets.
